Futures and Options Markets

  1. Futures Pricing Theory
    1. Spot-Futures Price Relationships
      1. Convergence at Expiration
        1. Basis Definition
          1. Basis Behavior Over Time
          2. Cost of Carry Model
            1. Storage Costs
              1. Financing Costs
                1. Insurance and Other Costs
                  1. Convenience Yield
                    1. Income from Underlying Asset
                    2. Market Conditions and Price Patterns
                      1. Contango Markets
                        1. Characteristics
                          1. Causes
                            1. Trading Implications
                            2. Backwardation Markets
                              1. Characteristics
                                1. Causes
                                  1. Trading Implications
                                  2. Normal Backwardation Theory
                                  3. Expectations and Risk Premiums
                                    1. Expectations Hypothesis
                                      1. Risk Premium Theory
                                        1. Market Efficiency Considerations

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                                      3. Futures Trading Mechanics

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                                      5. Hedging with Futures